Newsprint tariffs hit newspapers hard

Workers prepare to guide a forklift with newsprint to feed a printing press at the Fremont plant where The Chronicle has been printed since 2009.

Photo: Carlos Avila Gonzalez / The Chronicle 2009

“Never pick a fight with someone who buys ink by the barrel,” the saying goes. Yet the Trump administration is picking a fight with American newspapers over something they buy at even greater cost and quantity: newsprint.

The administration recently slapped tariffs and anti-dumping penalties on imported Canadian paper, resulting in newsprint price increases of up to 30 percent in the United States. I will give President Trump the benefit of the doubt here and assume this is not another attack on the free press from the man who has called journalists “enemies of the American people” and has alternately threatened to jail them, revoke their credentials and use government powers to undermine their owners’ business interests.

I will take the administration at its word that it is merely trying to save American jobs at a paper mill that claims unfair foreign competition.

It’s an indefensible move even by that standard.

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The Trump administration’s protectionist measures were taken in response to a trade complaint from a single company, Norpac, a Longview, Wash., paper mill that employs about 300 nonunion workers. Norpac, acquired in 2016 by the New York hedge fund One Rock Capital, alleged that its Canadian competitors benefited from 34 government subsidy programs, from cut-rate electricity to timber harvests on government-owned forests.

This dubious attempt to shield a few hundred paper-mill jobs from foreign competition is creating serious pain for a U.S. publishing industry that employs 600,000 workers.

Newsprint is the second-largest expense for American newspapers, surpassed only by payroll. The price jumps have been immediate and severe — as has the loss of jobs. The Tampa Bay Times of St. Petersburg, Fla., announced last month that it would be laying off about 50 workers as a direct result of a $3.4 million annual increase in newsprint costs.

“Make no mistake: These tariffs will cause layoffs across American newspapers, including this one,” Times CEO Paul Tash said in a letter to readers.

The cost to democracy goes beyond the payroll numbers. Fewer journalists means fewer eyes and ears on the city councils and school boards, fewer investigative reporters in pursuit of government neglect and malfeasance, fewer stories on the triumphs and tragedies in our communities. It’s also important to note that newspapers continue to have the largest news-gathering staffs in cities small to large, markets local to national, and their work typically drives broadcast news and commentary.

“If you want to silence a free press, take away the newsprint,” Susan Rowell, publisher of the Lancaster (S.C.) News and president of the National Newspaper Association, said in a statement. “That is what is happening now, and it is simply wrong.”

Responding to a chorus of such concerns, two Maine senators, Republican Susan Collins and independent Angus King, have introduced legislation (S2835) to suspend the tariffs on uncoated groundwater paper from Canada, the primary source of newsprint. It would require the Commerce Department to undertake a study of the economic state of both the newsprint industry and the local newspaper publishing industry before determining whether the tariffs actually are in the national interest.

“Throughout Maine, small-town newspapers remain a principal source of information for people looking to read the news, learn about the goings-on in their communities and stay up to date on current events,” King said. He noted that the U.S. newspaper business and paper manufacturers are “already operating on razor-thin margins.”

The Collins-King bill has attracted bipartisan co-sponsorship. Californians need to press their Democratic senators, Dianne Feinstein and Kamala Harris, to get on board. Time is of the essence. The U.S. International Trade Commission is expected to decide by mid-September whether to make the tariffs final; a verdict on the anti-dumping decision by Commerce could come in August.

There is ample reason to doubt the Norpac paper mill’s complaint that its woes are because of foreign competition. Collins suggested that “one domestic mill owned by a venture capital firm appears to be taking advantage of trade remedies to add to its own bottom line, putting thousands of American jobs at risk.”

In telling testimony, Russ Lowder of White Birch Paper said his company’s closing of its Virginia mill had nothing to do with Canadian imports. Rather, he said the fate of the paper business was inextricably tied to the decline of the newspaper industry: subscriptions have dropped, and demand has followed.

He said White Birch had considered buying Norpac in 2016, before it was scooped up by a hedge fund, but concluded its “operations faced a number of challenges that had nothing to do with imports.”

Obviously, I and everyone else who makes a living at an American newspaper have a vested interest in the outcome of this trade dispute. The Chronicle uses more than 10,000 metric tons of newsprint a year and is taking a hit from this huge price increase. This newspaper is determined to offset that cost with production efficiencies and revenue growth.

The impact could be far more devastating — and permanent — to small-town newspapers that have fewer options to pare costs or raise revenue.

I should emphasize that I approached this issue on my own, without any prodding from the Hearst Corp., which has owned The Chronicle since late 2000, and has been true to its word that its editorial decisions would be insulated from its business interests.

My concern is driven by the never-ending evidence that trade barriers are ultimately counterproductive to the economy, and often result in unintended consequences. Again, I am going on the assumption that the undermining of the ability of a free press to serve as a check on those in power is an unforeseen casualty of this Trump administration policy.

It’s gratifying that a group of senators is on the case to stop these ill-advised tariffs that are bad for the economy and bad for our democracy.

The newsprint tariffs come at a time when newspapers large and small are faced with myriad other economic stresses.

Bottom feeding

Digital First Media

What’s happening: From Boston to San Jose, the company controlled by a hedge fund has been eviscerating newsrooms even as it racked up $160 million in profit (a 17 percent margin) last year.

Why it matters: The cost to local watchdog reporting is immense. The Denver Post once had a staff of 300; with the latest cuts (a third of its staff) it will have about 65 journalists and support staff.

Upshot: In a remarkable rebellion, the Post editorialized last month against its “vulture capitalist” ownership. “They’ve killed a great newspaper,” former owner Dean Singleton said later in resigning as the newspaper’s chairman.

Advertising decline

Salt Lake Tribune

What’s happening: Citing a 40 percent drop in advertising revenue, 34 of the newspaper’s 90 staffers were laid off or retired last week, including seasoned reporters and columnists.

Why it matters: Not only will it have fewer journalists pursing stories, the state’s largest newspaper is eliminating its high-profile Utah news sections three days a week.

Before joining the opinion pages, he directed the newspaper’s East Bay news coverage. He started at The Chronicle in 1990 as an assistant city editor.

John began his journalism career as a reporter for the Red Bluff Daily News. Two years later, he was promoted to the Washington, D.C., bureau of the newspaper’s parent company, Donrey Media Group. After that, he worked as a general assignment reporter for the Associated Press in Philadelphia and as a statehouse reporter and assistant city editor for the Denver Post.

He graduated from Humboldt State University in 1977 with a degree in journalism. He received a Distinguished Alumni Award from HSU in 2009 and was the university’s commencement speaker in 2010.